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Chinese AI firm DeepSeek is facing mounting accusations from U.S. officials over alleged cooperation with China’s military and intelligence operations, as well as efforts to circumvent U.S. export controls.
The revelations, shared by a senior U.S. State Department official to Reuters on condition of anonymity, paint a concerning picture of how AI advancements may be entangled with national security threats.
According to U.S. intelligence, DeepSeek’s involvement with China’s government goes far beyond public AI model offerings. The company is said to be proactively cooperating with Beijing’s agencies, sharing user information and operational data, raising significant privacy and surveillance concerns.
The official noted that DeepSeek appears in over 150 Chinese military procurement records. These include records linked to research institutions affiliated with the People’s Liberation Army (PLA). Additionally, these associations suggest that DeepSeek is actively providing AI technology to bolster China’s defense capabilities.
Use of Shell Companies and Restricted Chips
DeepSeek is also accused of trying to bypass U.S. export rules. The company allegedly used shell firms in Southeast Asia to get Nvidia’s H100 chips. These chips have been restricted by the U.S. since 2022. Nvidia said DeepSeek only bought H800 chips legally. But Reuters couldn’t confirm the number or type of chips DeepSeek actually has.
The company is also said to be remotely accessing U.S. chips through data centers in non-restricted countries. This legal loophole still concerns Washington, especially if military-linked entities are involved. In Singapore, three men were recently charged with fraud related to moving Nvidia chips, possibly linked to DeepSeek.
Questions Over Technological Claims
DeepSeek made headlines in January by claiming its DeepSeek-V3 and DeepSeek-R1 AI models rival OpenAI and Meta in performance at a fraction of the cost, just $5.58 million for computing power. However, U.S. experts have cast doubt on the credibility of this claim, suggesting the costs were underestimated and the models may rely heavily on U.S.-origin technology.
This fuels Washington’s belief that Chinese firms may be overstating their technological independence while still being heavily dependent on Western innovation. Despite not being on any official U.S. trade blacklist, DeepSeek remains under active investigation.
Rising Tensions and Global Implications
The case highlights rising U.S.-China tensions in AI and tech trade. Washington wants to limit chip access for Chinese firms seen as security threats. Chinese law requires data sharing when requested. But DeepSeek is accused of sharing data willingly. This goes beyond normal legal compliance.
Amazon, Microsoft, and Google currently offer DeepSeek products through cloud platforms, which may prompt further scrutiny from regulators and lawmakers.
For now, the U.S. has made no official announcements on sanctions, but the situation is being closely monitored. The outcome could influence not just AI trade policy, but also how global tech companies interact with entities operating in authoritarian regimes.
